CBA: Aussie households are better-off than you think

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Kristina Clifton, Senior Economist at CBA, has released interesting analysis examining household incomes and expenditure. She finds that average household disposable incomes have grown over the past year, thanks to emergency income support and early superannuation release, but expenditure has obviously fallen:

  • The income of the average household has lifted over the past year driven by strong growth in government benefits and investment income (including the early withdrawal of super).
  • Not surprisingly spending has fallen over the year, with solid falls in Q1 and Q2 20.
  • Income growth over the past year has been strongest for younger people driven by strong growth in government benefits.

The income of the average household rose by 4.2% over the year to Q2 20, up from 2.4% over the previous year. Salaries have fallen due to coronavirus job losses. But investment income and government benefits have increased sharply. Investment income is capturingthe early withdrawal of super which is part of the COVID-19 response. Spending has fallen by around 9% over the year to Q2 20, with falls in Q1 and Q2.

A breakdown by age shows that the youngest cohort, Gen Z, has seen the strongest income growth (8.9%/yr), followed by the Millenials (6.7%/yr). Income has also risen for Gen X and older Australian. Boomers have experienced a fall in income over the year to Q2 20. Gen Z and Millenials are the only coherts to show a lift in spending over the year. Spending has fallen the most for Boomers (-7.7%).

Growth in government benefits has been strongest for Gen Z, Millenials and Gen X. A higher share of people in these ages groups were in the labour force prior to COVID-19 and are now receiving the JobSeeker payment. Many households across all age groups are also receiving the $A750 stimulus payments.

Investment income has risen strongly for the younger coherts. Investment income is capturing the early release of super that has formed part of the COVID-19 stimulus response. Latest figures show that there has been a total of $A28bn of super released.

Our data shows that just over half of all households were receiving some type of government benefit in Q2 20, up from 41% in Q2 19. Other CBA data shows the number of people receiving unemployment benefits has lifted by over 80% over the year. Not surprisingly there has been a fall in the share of households receiving a wage or salary payment.

Our data shows a large increase in the number of people holding equity trading accounts. Volatility in share markets and perhaps more time at home looks to have drawn people towards buying and trading shares. The number of bank deposits has lifted and the average savings balance per household has risen strongly.

Interesting analysis. Household income will obviously fall once emergency income support is wound back from October:

  • JobKeeper reduced from $1500 to $1200 ($750 part-time); and
  • JobSeeker reduced from $1100 to $815.
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The Grattan Institute estimates this tapering will reduce income support from $18 billion a month (10.7% of monthly GDP) to $3 billion a month (1.9% of GDP) for the six months beyond:

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.